TikTok: Transforming Music Creation and Distribution

I am passionate about the creator economy as an investment theme for my work at Flybridge, where we have invested in a few leading creator economy platforms such as Splice, HiFi, and Fable. I recently wrote a post deconstructing the new monetization methods for online creators. My research in this area led me down a rabbit hole of the creator sub-category of music, and how music-oriented social platforms are evolving the music creation and distribution processes. Unsurprisingly, through my conversations with musicians, labels, and creators, TikTok was continually cited as a catalyst in this transformation. Interestingly, TikTok has been written about frequently as a cultural phenomenon (and, more recently, as a political football) but I have not seen much written about TikTok as a business platform and economic engine for the next generation of creators. Hence, this post.

TikTok: A “Media” vs. A “Social” Platform

For those of you that have somehow avoided a TikTok binge at some point during quarantine, here’s a bit of context on the platform. TikTok, formerly known as the “lip-syncing” app Musical.ly, launched in Shanghai in 2014. In 2018, ByteDance — a Chinese content conglomerate now worth over $100 billion — acquired TikTok and rolled it into the platform. In 2020, TikTok was downloaded more times than any other app in the world.

TikTok, in many ways, operates more like a media than a social platform. Take the social media platform Instagram, for example. Like TikTok, Instagram customizes all content, known as “feeds”, for its users. However, users remain largely in control of the content they see, as it’s determined by the accounts they proactively elect to follow: friends, family, brands, influencers, etc.

TikTok, in contrast, uses a sophisticated recommendation engine to show users content based on their unique preferences and categories of content that are “trending” — rather than predominantly content produced by accounts that they follow. This algorithm is fed content data (e.g. native content information and hashtags), user data (e.g. user preferences and attributes) and situation data (e.g. time, duration, language, and device data). While there’s an incredible amount of analysis that goes into determining how these data points are utilized to prioritize and distribute content, what’s key to understand is that TikTok — not consumers — predominantly determines who sees what content and when.

Ultimately, this unique approach to content recommendation and distribution is relevant to musical creators because unlike other social platforms, TikTok doesn’t require users to have a large, built-in following that they migrate to the platform to generate views, likes, shares, etc. If their content performs well in its first few view cycles, specifically in regards to what percentage of the content is viewed, and if it is rewatched or shared, there is a potential for continual exposure and eventually virality.

A TikTok Virality Success Story: Lil Nas X

One iconic example of a completely new artist’s music going viral on TikTok is Lil Nas X’s “Old Town Road”. Lil Nas X bought the song’s original beat online for about $40 in 2018, prior to which he was unknown. He officially launched “Old Town Road” on Soundcloud in December 2018, and by April it topped the Billboard Top 100 Chart.¹

Many believe Lil Nas X strategically launched a TikTok challenge associated with the song to encourage virality. But, it was actually first picked up by Michael Pelchat, or “NiceMichael”, a random influencer with around 100,000 followers. (Pelchat actually reached out to Lil Nas X to request permission to use the song, and collaborate, and didn’t hear back.) Pelchat proceeded to make a video of himself turning into a cowboy while listening to “Old Town Road” (this makes more sense if you watch the video) and it took off. Thousands of influencers began replicating the challenge.

Following the success of artists like Lil Nas X, mainstream artists have followed suit in utilizing TikTok to launch new music or revitalize old tracks.

Jason Derulo, a pop/hip-hop artist that rose to prominence in the 2000s, is now one of the biggest acts on TikTok. Derulo’s TikTok success can be attributed to his genuine engagement with fans, and consistent, and authentic content creation — ranging from challenges and dances to showing aspects of his personal life. Much like YouTube’s partner program, multiple TikTok employees confirmed that they’re working directly with Derulo to help him optimize his content for the platform. Derulo’s career is arguably the best it’s ever been due to TikTok, so much so that in 2019 he opted not to resign his contract with Warner Studios and is currently representing himself.

Interestingly, despite Derulo’s success, utilizing TikTok isn’t completely without criticism for mainstream artists. Several musicians I spoke with shared that artists like Justin Bieber are going “too far” by specifically engineering songs for virality on social platforms. From a marketing perspective, it’s beneficial to make songs with catchy, 15-second-or-less verses that creators can easily overlay a dance or challenge too. However, in the eyes of musicians, this overengineering is seen as “selling out”.

Hacking TikTok Virality:

Given the range of speculation regarding how songs go viral on TikTok, and questions regarding how to reverse engineer this virality, I spoke with several musicians and music managers who have had both positive and negative experiences utilizing TikTok. The first artist I spoke with was Eli Sones of Two Friends (one of my guilty music pleasures, and consistently in my Spotify top artists). Two Friend’s catchy DJ mixtapes have millions of streams on Spotify and cater to Gen Z audiences. Yet, they haven’t had great success launching or marketing music on TikTok. Sones noted that, despite the virality of previously unknown artists on TikTok, “it’s really hard to force it” and that most of TikTok music virality is “not on purpose”. When Two Friends tried to launch a song through TikTok influencers, it “barely made a difference”.

In speaking with several senior TikTok employees to get their take on reverse engineering virality, they mostly echoed the sentiment that you can’t “hack” TikTok’s algorithm. The only exception they all noted was having creators themselves heavily lean into the platform — from consistently creating dances and challenges, to responding to all comments and taking the time to engage with their communities. As noted, Jason Derulo has seen great success with this tactic.

Another unforeseen challenge for new artists utilizing TikTok is that success often seems to stop after one song. Lil Nas X’s “Old Town Road ‘’ has over one billion streams on Spotify, but all his other songs lag significantly. This is likely much less of an issue for the Justin Bieber’s of the world with established brands using TikTok to launch individual songs. But, for net new artists, breaking out of the one-TikTok-hit-wonder is proving challenging.

Interestingly, while musicians and TikTok employees alike claim it’s hard — if not impossible — to deliberately go viral on TikTok, several music labels and management companies disagree. Songfluencer, a tech-forward music label, suggests that there is a data-driven science to launching new music on social platforms. Louis O’Reilly, Partner and CTO at Songfluencer, suggest that “certain types of influencers are best to start the process, others to continue, and another to close out, and the order matters.” He also shared that in optimizing for content to be fully watched, re-watched, and shared, targeting mega influencers with millions of followers may not be the best approach for lesser-known artists. Instead, targeting influencers with less, but more engaged, followers can be a more effective approach — especially if their followers are the right demographic for the music.

What’s Next For TikTok?

Deliberate or not, new artists are “making” it on TikTok. TikTok shared that, in 2020, over 70 new artists utilizing that platform to launch their careers have signed with major music labels. Furthermore, “nearly 90 songs that trended on the platform in 2020 climbed onto the Top 100 charts in the US, with 15 of those reaching №1 on a Billboard chart.”²

Ultimately, TikTok is a relatively new platform, and the platform’s long-term impacts on the music industry are still unfolding. As I continue to watch TikTok’s influence on the music creation and distribution processes, here are a few outstanding questions and themes that remain top-of-mind:

  1. Data-driven marketplaces that match influencers/creators and musicians/brands. YouTube notably acquired FameBit in 2016, a platform facilitating matchmaking between creators and entities looking to promote content. While independent platforms like Songfluencer are building tools in this space, TikTok may also create or acquire its own matchmaking marketplace, or tech-enabled music agency. (The question of “how much can you automate matching?” still remains. And, more specifically, will a big brand ever sign up for a self-service influencer matching marketplace?)
  2. Democratized/social-led music consumption. Maybe it’s just my version of the app, but it’s not easy to learn more about a song or artist you hear on TikTok, or stream it on Spotify, etc. (TikTok launched a streaming product last year in India, but it appears to be more of an independent product versus an extension of TikTok’s platform, at least for the time being.)
  3. Creator analytics. This is something I’ve looked at in the context of the Creator Economy more broadly, but creators should be better equipped with data pertaining to their audiences, engagement, etc., particularly as this data could be critical in securing brand sponsorships with musicians. (I haven’t looked into this extensively, but whatever happened to “NiceMichael” who launched the “Old Town Road” video? I doubt he captured even a small fraction of the earnings from the virality he catalyzed).
  4. What will TikTok’s version of the YouTube Partner Program look like? In talking with a few senior leads at TikTok it seems this is something they’re actively doing with major artists already (e.g. Jason Derulo). Is there a way to automate, or semi-automate, assisting up and coming artists and creators on the platform?
  5. Consumer and creator interaction — both through incumbent and new platforms. Ole Obermann, Global Head of Music at TikTok, stated that TikTok shares “our community’s passion for music and we’re dedicated to providing a platform where artists and fans can interact and thrive.”³ Yet, the platform currently offers limited tools for consumers to engage with creators, musicians, or even other consumers with similar interests. This may be something they focus on in 2021. But, in the meantime, dozens of platforms, ranging from Cameo and Patreon to Jemi are working to help creators develop communities around their brands, and connect with their followers.

Footnotes:

  1. ABC News, ABC News Network, abcnews.go.com/Entertainment/lil-nas-bought-town-road-beat-30-story/story?id=64511949#:~:text=%22Old%20Town%2
  2. Stassen, Murray. “TikTok Says over 70 Artists That Broke on the Platform This Year Have Signed Major Label Deals.” Music Business Worldwide, 20 Dec. 2020, www.musicbusinessworldwide.com/tiktok-says-over-70-artists-that-broke-on-the-platform-this-year-have-signed-major-label-deals/.
  3. Stassen, Murray. “TikTok Says over 70 Artists That Broke on the Platform This Year Have Signed Major Label Deals.” Music Business Worldwide, 20 Dec. 2020, www.musicbusinessworldwide.com/tiktok-says-over-70-artists-that-broke-on-the-platform-this-year-have-signed-major-label-deals/.

MBA Candidate @ Wharton | Investing @ Flybridge, X-Factor Ventures, and The MBA Fund | Previously @ Underscore VC, WeWork, and Plum Alley Investments

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